The Resource Curse Theory:Implications Of China’s Quest For Energy In Angola’s Oil Sector?

This paper aims to provide a detailed analysis of the developmental outcomes of China’s involvement in the Angolan oil resource sector. Employing Gonzalez-Vicente’s (2011) analytical framework of the resource curse theory and dependency, it shall explore the developmental dynamics (the socio-economic and political legacies) that exist in Angola and evaluate how these have been affected by China’s growing investment, particularly, through Chinese National Oil Companies (NOCs). The scope of such an undertaking will require posing the following questions:How are China’s energy policies and approach to resource extraction abroad different from those that are accepted as having been the causes of the resource curse in the past? What are the circumstances that ascertain whether Angola (and other countries) will benefit from strategic relations with China? To what extent is a shift toward natural-resource-intensive exports to China by developing nations of concern with regard to developmental success?China’s engagement in Africa’s extractive sectors has increased significantly in the last few decades. Its approach to the acquisition of natural resources abroad is somewhat unique and a manifestation of its various foreign policies. One of the more controversial of these policies is its non-interventionist approach, which facilitates no linkage between China’s commercial interests and any required standards of conduct in a host country. This stance has the means of causing different developmental implications, depending on internal trends and structures within investment host countries. Whilst remaining fiercely critical of a Chinese "resource grab" in Africa, the US and UK media have constructed "China Inc" as a monolithic beast with an insatiable appetite for African. Some academic commentators regard this monolithic "China" as a threat to the established consensus within the international aid industry (e.g. around good governance), suggesting that China-Africa relations are about imperialism, or will lead to further chaos, corruption and authoritarianism. Amidst the misinformation and hasty conclusions, it became clear that many were not addressing the central questions; what are the Chinese doing in their new wave of aid and economic cooperation across Africa? What will this mean for development in Africa?Angola has come to occupy an increasingly important position within Beijing’s economic and foreign policy strategies, overtaking Saudi Arabia as the largest supplier of oil to China in2006and again in early2010. Importing some US$9billion of Angolan oil in2006alone, Angola has become China’s largest and most strategic trade partner in Africa with the volume of bilateral trade reaching US$24.8billion in2010. In return for guaranteed supplies of oil, China has opened up multi-billion dollar credit lines to help finance the rebuilding of Angola’s war-torn infrastructure since the end of the civil war(s) in2002. In terms of China’s quest for natural resources abroad and in particular the need for oil supplies, this "blurring" of aid, investment and "development"’packages has been the cause for many Western oil companies and states to complain that China’s ability to link its oil investments to government-to-government financial assistance gives its companies an unfair advantage (Lee and Shalmon,2008). China realized that if it offered a package of benefits that went beyond oil, it would be able to develop partnerships as opposed to commercial relationships based on one commodity and its efforts would differentiate it from the purely commercial approach most Western companies have adopted. The perception that China’s NOCs are acting under instructions and under close coordination with the Chinese government has fuelled the West’s perspective of unfair advantage and concerns that Chinese NOCs could result in reduced and more expensive supplies to other oil-importing nations.The significance of exploring the implications of China’s engagement in oil-rich countries is largely intertwined with the widely accepted notion that oil wealth often wreaks havoc on a country’s economy and politics, helps fund insurgents, and aggravates ethnic grievances. With oil ever more in demand, the problems it spawns are likely to spread further. Understanding the complex dynamics of each of these realms shall facilitate the ability to explore the projection of Chinese energy policies and its foreign policy stance at large, upon a state that has long been recognized as suffering from the challenges of the resources curse theory. Essentially, the framework utilised in this paper, will provide a way in which to analyse the extent to which China’s policies toward resource-endowed states are indeed different from those adopted by the West and how the divergences in approaches shall affect the historically produced curses in Angola that have hampered its development and defined its position in the periphery zone with regard to dependency. Thus it will facilitate a temporally contextualized ’mapping’ of the resource curses in Angola; from an understanding of the historical determinants, how they morphed to produce the current challenges and finally the role of China in contemporary Angola and how this shall influence and impact the developmental path the country shall follow in the future. It will also facilitate trying to establish what implications China shall have on the idea of dependency and the position resource-rich nations shall procure in a global international system that has undoubtedly changed as a result of the rise of China as a global power.The thesis holds that China’s growth and investment have strengthened the position of resource-endowed countries in the international economy, revitalizing resource industries and improving terms of trade for commodities. Concurrently, the expansion of extractive activities has brought about increased environmental and economic sustainability challenges as well as new governance obstacles that host countries shall have to navigate. In the absence of a domestic crisis or a series of commercial failures, it is almost certain that China’s NOCs will continue their overseas expansion. Attempts to obstruct this spread may be counter-productive. Partnership rather than confrontation will prove to be more constructive. Establishing dynamic, holistic policies that work symbiotically are a requisite for both China and resource-rich host countries if mutual benefit and development is to be attained.